South Carolina Code of Regulations
Chapter 117 - DEPARTMENT OF REVENUE
Article 24 - MISCELLANEOUS TAXES
Section 117-1600.5 - Stamping and Storage of Cigarettes in South Carolina by a Distributor

(A) Stamping Methods

Distributors generally stamp and store cigarettes in one of two methods - a "Stamp-to-Order" method and an "Advanced Stamping" method. These methods can be briefly described as follows:

Stamp-to-Order Method: Under this method, cigarettes are stamped only as orders are received. Once the cigarettes are stamped, distributors typically load the order onto a truck or place the order in a staging area for loading onto a truck either later that day or the next day. The stamp-to-order method is only permissible in South Carolina if the law does not require that cigarettes be stamped within a specified time period in order not to be considered contraband.

Advanced Stamping Method: Under this method, cigarettes are stamped before orders are received. If the law requires that cigarettes be stamped within a specified time period in order not to be considered contraband, then distributors must stamp all cigarettes within the time period established by law so as not to be considered contraband.

(B) Storage Requirements

The storage requirements established in this section only apply to warehouses located in South Carolina. Each warehouse in South Carolina which, in addition to selling South Carolina tax paid cigarettes, sells cigarettes in another state or cigarettes which are tax exempt in South Carolina, must obtain approval of its storage method from the Department in advance of implementation. South Carolina warehouses which only sell South Carolina tax paid cigarettes are not required to obtain approval of their storage methods.

Stamp-to-Order

If a distributor is permitted under this regulation and approved by the Department to use the stamp-to-order method, then the distributor is not required to maintain separate compartments or areas for South Carolina tax paid cigarettes, cigarettes to be sold in another state, and cigarettes to be sold tax exempt in South Carolina. However, the distributor's staging areas must be clearly marked and separated to avoid commingling of South Carolina tax paid cigarettes with cigarettes to be sold in another state or cigarettes to be sold tax exempt in South Carolina. The Department must approve the distributor's staging areas in advance of implementation. The Department will provide a copy of the written approval to the distributor to maintain for the distributor's records. If the distributor at a later date redesigns its warehouse or system whereby the Department-approved staging areas are changed, such change must be approved by the Department in advance of implementation.

Advanced Stamping

If a distributor is approved by the Department to use the advanced stamping method, then the distributor is required to maintain separate compartments or areas for cigarettes. Distributors who follow the advanced stamping method must, at a minimum, maintain one separate area for South Carolina tax paid cigarettes and one separate area for cigarettes to be sold in another state and/or cigarettes to be sold tax exempt in South Carolina. Alternatively, distributors may choose to maintain a separate area for each respective state and a separate area for cigarettes to be sold tax exempt in South Carolina.

These areas may be separated by creating a separate room(s), compartment(s), by using a bin(s), or other manner of storage clearly separating South Carolina tax paid cigarettes from cigarettes to be sold in another state and/or cigarettes to be sold tax exempt in South Carolina. Distributors must clearly mark the separate areas with signs warning employees regarding which cigarettes are South Carolina tax paid cigarettes, which cigarettes are to be sold in another state, and which cigarettes are to be sold tax exempt in South Carolina.

Any distributor operating a warehouse where cigarettes are stamped in advance must obtain approval from the Department for its separate room(s), compartment(s), bin(s), or other manner of storage in advance of implementation. The Department will provide a copy of the written approval to the distributor to maintain for the distributor's records. If the distributor at a later date redesigns its warehouse or system whereby the Department-approved separate room(s), compartment(s), bin(s), or other manner of storage is changed, such change must be approved by the Department in advance of implementation.

(C) Other Stamping and Storage Methods

There may be other stamping and storage methods than stamp-to-order and advanced stamping. All other stamping and storage methods must be approved by the Department on a case-by-case basis. Written approval for another stamping and storage method must be obtained from the Department in advance of implementation. The Department will provide forms for distributors to submit requests for approval of stamping and storage methods, and approval will be determined on a warehouse-by-warehouse basis. The Department will provide a copy of the written approval to the distributor to maintain for the distributor's records. If the distributor at a later date redesigns its warehouse or system whereby the Department-approved stamping and storage method is changed, such change must be approved by the Department in advance of implementation.

The provisions of this subsection do not apply to distributors who only sell South Carolina tax paid cigarettes and who do not sell cigarettes in another state or cigarettes which are tax exempt in South Carolina.